Breaking: Appeals Court Sends Viacom-YouTube Case Back To District Court, Future Of Safe Harbors Still Uncertain

from the some-good,-some-bad dept

The original ruling in the Viacom vs. YouTube case was a complete and total victory for YouTube. The court effectively dumped the case at the summary judgment stage, correctly recognizing that YouTube qualified for the DMCA's safe harbors, and that Viacom was trying to change the clear definitions in those safe harbor provisions. This upset many copyright maximalists, and we heard stories about how the ruling would never survive the appeal. To some extent that was correct. The ruling in the appeal came out today, and it definitely walks back some of the original ruling, but, on the whole, it still leans towards YouTube's position.

The key question in the lawsuit revolved around the so-called "red flag" knowledge question -- and whether or not that meant specific knowledge of items that were infringing (as YouTube and the lower court believed) or just general knowledge of infringement on the site (as Viacom argued). Here, the appeals court got it right, saying that specific knowledge is necessary.

Although the parties marshal a battery of other arguments on appeal, it is the text of the statute
that compels our conclusion. In particular, we are persuaded that the basic operation of § 512(c)
requires knowledge or awareness of specific infringing activity. Under § 512(c)(1)(A), knowledge or
awareness alone does not disqualify the service provider; rather, the provider that gains knowledge or
awareness of infringing activity retains safe-harbor protection if it “acts expeditiously to remove, or
disable access to, the material.” 17 U.S.C. § 512(c)(1)(A)(iii). Thus, the nature of the removal
obligation itself contemplates knowledge or awareness of specific infringing material, because
expeditious removal is possible only if the service provider knows with particularity which items to
remove. Indeed, to require expeditious removal in the absence of specific knowledge or awareness
would be to mandate an amorphous obligation to “take commercially reasonable steps” in response to
a generalized awareness of infringement. Viacom Br. 33. Such a view cannot be reconciled with the
language of the statute, which requires “expeditious[ ]” action to remove or disable “the material” at
issue. 17 U.S.C. § 512(c)(1)(A)(iii) (emphasis added).

The court rightfully rejects the idea that the "red flag" knowledge part of the DMCA means that just knowing that there's some infringement -- without knowing specifics -- means you lose the safe harbors. Since this is the key question in the lawsuit, it's great that the appeals court got this right. This was also the point that the maximalists insisted that no appeals court would uphold, and, clearly, they were wrong about that.

The court responds to the claim that if red flag knowledge does not apply to "general" knowledge of infringement, then it's superfluous, by noting that's not true:

The difference between actual and red flag knowledge is thus not between specific and
generalized knowledge, but instead between a subjective and an objective standard. In other words, the
actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific
infringement, while the red flag provision turns on whether the provider was subjectively aware of facts
that would have made the specific infringement “objectively” obvious to a reasonable person. The red
flag provision, because it incorporates an objective standard, is not swallowed up by the actual
knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do
independent work, and both apply only to specific instances of infringement.

In other words, it's possible to show that there are red flags, but they have to be red flags for infringement of specific items, not knowledge that there is infringement in general. That's a good ruling and it makes sense. Accepting Viacom's interpretation would have effectively killed large parts of the DMCA. YouTube's interpretation (now supported by both the district and the appeals court) keeps the DMCA's safe harbors in existence.

That said, the court then suggests that the district court may have erred in granting the summary judgment on that point. Here, the court is talking specifically about YouTube's actions, and saying that Viacom at least raised enough issues that it is possible to argue that YouTube did, in fact, have knowledge of specific infringement. In other words, the court agrees on the big picture interpretation of the law, but disagrees on the specific application by the district court. It doesn't mean that the court thinks that YouTube violated the DMCA -- just that Viacom at least raised enough issues that it should be handled by a jury in a trial, rather than decided at the summary judgment stage. So the case will now go back to the district court to be heard over that issue.

Even here, the judge notes that while Viacom pointed to some email evidence that YouTube execs may have known of some specific instances of infringement which they ignored, it also points out that it's unclear if those specific instances involve videos that are part of this lawsuit -- and that's necessary if YouTube is to lose its safe harbor provisions.

A second issue involves the question of whether or not YouTube exhibited "willful blindness" to infringement on the site. Here, the ruling is a bit troublesome. It notes that the DMCA does not refer to willful blindness (and that the DMCA does note that there is no duty to monitor). But... it then still suggests that there can be a willful blindness question under the DMCA if there is specific knowledge of infringement. So, again, going back to the main issue in this case, if Viacom can show specific knowledge, it might also be able to get YouTube for being "willfully blind." But, it's no sure thing that Viacom can actually show specific knowledge of clips that are a part of this lawsuit.

The third issue is the question of what "the right and ability to control" infringing activity means. Both YouTube and Viacom interpret that phrase differently... and here, the court rejects them both. The district court accepted YouTube's interpretation, saying (reasonably, in my opinion) that a service provider must know of the particular case before it is required to "control" it. That is, how can the "right and ability to control" apply to a situation where there is no specific issue at hand? What is the service provider expected to control if it doesn't know what it's controlling? Viacom, instead, argued that the issue around the "right and ability to control" created a magical "vicarious liability" for service providers if their services were used to infringe. Both courts reject that argument as making little sense and (importantly) going against the Congressional record (which specifically left out vicarious liability, which had been found in an earlier DMCA draft). Here, the appeals court tries to thread the needle with a somewhat confused ruling that doesn't quite agree with either side. It's not a vicarious liability standard, but it doesn't quite require specific knowledge. Instead, the court literally says "something more" is required -- and asks the district court to consider what that "something more" might be.

Finally, there's an issue of what "by reason of" storage means. The DMCA's safe harbors give protection for infringement that happens "by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." YouTube (and the district court) pointed out that YouTube fits under this definition. Viacom tried to argue that YouTube does not qualify because it does much more than storage -- such as converting (transcoding) videos, offering playback of videos and offering "related videos." Viacom tried (at both levels) to argue that those functions go beyond mere storage, and do not qualify for safe harbor protections. Thankfully, the appeals court here agrees with the lower court and says those are protected. It notes that it's clear that Congress intended "service provider" to mean much more than just a storage provider. I should note that one of our frequent critics in the comments has been insistent that the DMCA was designed only to apply to pure storage providers -- but now we've got yet another detailed court ruling pointing out that this is 100% false.

However, the court does send one "feature" back to the lower court for review. It questions whether or not the syndication of videos to third party sites then falls outside the safe harbor provisions concerning "by reason of storage." The court isn't sure that this is outside the safe harbors, but at least asks the lower court to explore the issue.

In the end, this is a mostly good ruling. It gets the biggest question of law right, even if it's not sure about YouTube's specific actions. On some of the other points, it's a little fuzzy in its thinking, but this is still mostly a victory for YouTube at this stage (though, who knows how the lower court and a jury will rule on some of the specifics). It could have been a more complete victory, but this is hardly the complete rejection of the district court ruling that some maximalists insisted was going to be delivered.

Reader Comments

" I should note that one of our frequent critics in the comments has been insistent that the DMCA was designed only to apply to pure storage providers -- but now we've got yet another detailed court ruling pointing out that this is 100% false. "

Actually, what is shows is that the wording of the law is way to open to interpretation. The original intention was mostly for material stored by the user for the users use (including such things as caching, and so on... acts that happen at the direction of the user). The open wording has allowed the courts to make this decision.

What it does is create the perfect attack point for those who support (SOPA PIPA Whatever) style legislation. Narrowing this definition would have the effects of making many of these business models illegal, as they are really not what DMCA was intended to achieve.

You can argue it all you want Mike... I was very much involved when the law was written and I understand what the intent was. Sadly, the intent and the court's view don't match.

Too bad - this ruling just makes it clear that DMCA needs to get overhauled to address that point.

Re:

How were you involved? On the Judiciary Committee staff drafting the bill under Orrin Hatch? Because your interpretation of the reasoning for those provisions of the DMCA doesn't match their recollections.

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You do realize that it is the courts' job to interpret laws right? I mean, that is basic Civics 101 stuff here. Congress writes bills. President Signs them into law. The Courts interpret the laws. Basic stuff here.

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Actually, what is shows is that the wording of the law is way to open to interpretation. The original intention was mostly for material stored by the user for the users use (including such things as caching, and so on... acts that happen at the direction of the user). The open wording has allowed the courts to make this decision.

This is not true. Not even close to true. I know multiple people who were involved in the negotiations and you are simply wrong.

What it does is create the perfect attack point for those who support (SOPA PIPA Whatever) style legislation. Narrowing this definition would have the effects of making many of these business models illegal, as they are really not what DMCA was intended to achieve.

You are incorrect. This is exactly what the DMCA was intended for.

You can argue it all you want Mike... I was very much involved when the law was written and I understand what the intent was. Sadly, the intent and the court's view don't match.

I know people who were involved when the law was written. You were not one involved. The intent absolutely matches what went with the discussion at the time.

Re: Re: Re:

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Lets see, I know Mike from Techdirt (though not personally), I have some idea of his reputation (based on years of visiting Techdirt). A non-anonymous person with a good reputation of being honest claims something, some random anonymous (likely to be a) shill (but who knows) claims the opposite. Who should I trust??? Which one requires more faith and which one has more credibility, the word of some random anonymous person or the word of a non-anonymous person with a good reputation?

Not a tough choice.

Journalists often stand by their claims and convictions based on anonymous sources. In that case, it's the public's job to assess the reliability of the journalists claims based on the journalists reputation, intelligence, honesty, and ability to discern reliable information from unreliable information.

I'm sorry, so far the word of Mike Masnick as a source of information has far more credibility than the word of some random anonymous commenter.

Re: Re: anonymous coward is right

I don't know who the Anonymous Coward is, but I must know him, because I was also involved in the DMCA negotiations from beginning to end. I think even Mike will concede that as true. And, AC is absolutely correct. The DMCA 512(c) safe harbor was intended to cover storage services, not streaming services. The broad interpretation by the courts has been a real travesty, and encouraged creation of innumerable parasitic internet business models that knowingly profit from others' ingenuity.

Re: Re: Re: anonymous coward is right

Can you explain to me what the legal difference is? From a technical point of view, the difference is hazy. I run a private server that I store all my music on, and stream from it to whatever device I want to listen to the music on. The software I use was designed as a basic storage service, but it works perfectly well for streaming. In this case, there is zero technical difference between the two, so I'm curious as to how the lawyers see the difference.

Re:

No, you cannot make an argument from authority or experience while posting anonymously. Prove your were involved or kindly shut the fuck up and stop wasting everyone's time without ludicrous claims like 'I was totally there, take my word for it!'

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Exactly, when some random anonymous person wants to stake his reputation, authority, credibility, and honesty against a non-anonymous person, there is no contest. It's a no brainer, duhhhh!! For all I know, all these AC's could be the same AC using TOR. Who the heck knows so their word when it comes to a source of information is absolutely meaningless when compared to the word of a non-anonymous person.

Re: Re:

"you cannot make an argument from authority or experience while posting anonymously."

In general, I disagree with this. Everyone has their own personal and unique experiences that they can make an argument from, even anonymously. Just that an anonymous argument from personal experience should be considered far more carefully, especially if it's something unlikely from someone who says things that obviously don't make sense, like some of the AC's here who claim they just so happen to know random people that we discuss. These claims come up very often and are very unlikely to all be true. It's likely the same AC (or very few AC's) making them and they're likely mostly false.

Especially when we already know that there is a Techdirt AC that tried to impersonate an IP critic to make IP critics look bad.

If there is one thing IP extremists and those who benefit from government established monopolies have made very clear it is that they have absolutely no regard for morality beyond their own selfish desires. They are more than willing to lie and to completely disregard any form of moral standards to serve their own interests. So it's not hard at all to believe that these people are simply telling another lie, especially when they go around anonymously making unlikely claims.

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Okay, you were /around/ when it passed. Guess what, Chuckles? I've got a good notion that everyone posting on this article, today, was 'around' when it passed, and are familiar with the level of technology at the time. That means precisely squat in determining the intent. If you were not present, actively working on the bill, or in direct contact with those working on the bill, then you cannot speak of the intent with good authority. We label such accusations as hearsay.

Re: Re:

yeah, his answer is "I don't agree with you, and the judges in this case don't either". That doesn't make my points any less valid, it only means that, in the 14 years since DMCA was brought out, that the judges have whittled away the original intent, and left us with a toothless law that allows anyone to profit from copyrighted material as a business model.

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If after years of throwing money at the judicial system and government you've failed to get the result you want, it's not a failure of the judges. But that's alright; you can sit in the corner with Chris Dodd and threaten to stop funding politicians. We'll all be better off for it if you do.

We need to help them

We need to help IP maximalist agenda. Lets face it, it is creeping along bit by bit. Lets help it get to the point where innovation is halted. Peak innovation needs to happen for real change. The public has neither the time or money to effectively fight this battle. Let em have it. Let it get to the point where every TV show, movie has blur bubbles in them to hide potentially infringing images in the background. Then when no one can create anything, even the IP maximalist that pushed for this will be neutered and wont be able to create anything new. Because, thats what copyright was meant to do. /s

Could Youtube simply bring in a laptop with videos, play them, and ask the judge if they're infringing? Of course the judge would have NO idea, the same as Youtube. A video may have copyrighted material, it may be licensed, it may be CC or public domain, it might be approved, it might not, it might be made by a monkey, or it might be (gasp!) fair use.

No one knows and no one can magically tell if something is infringing. Even if you have a suspicion of infringement, you still have NO idea.

No Fair

All of this hullaballoo just lines the silk pockets of the corporate lawyers (on both sides of the battles) and strokes the egos of short-sighted, control-freak executives.

If I was a stockholder in a media company or if I was one of the artists allegedly being represented by these fools, I'd be suing them out of their oak-paneled offices for their criminally poor performance. What kind of idiot, seeing demand for something their company putatively sells, tries their hardest to prevent any free publicity while at the same time refusing to offer the product in its desired form or even at all? Whatever happened to "the customer is always right?"

Re: No Fair

I am a firm believer that "the customer is always right" went right out the window when businesses started putting up signs that said "We reserve the right to refuse service to anyone, for any reason."

Actually

Sometimes, I kind of feel like maybe YouTube losing this case would be the best thing that could happen.

If YouTube were wiped from the net, I can only image that the negative response to Congress would be COLOSSAL.

If millions of e-mails about SOPA scare them, I can't imagine how disturbed they would be by 100 million e-mails....

The loss of a major internet site to our horrendous copyright laws in the near future is almost a certainty. Eventually someone likeYoutube, Dropbox, Twitter, Facebook, etc. will be severely hit by a bad copyright decision and have their services either totally disabled or seriously impaired.

The response from users of the internet will be drastic and enormous and any politician on the wrong side of the issue will be finished.

I liken the vain attempts to trying to stop all copyright infringement to the futility of trying to stop all speeding on all roads all the time. If people got a fine EVERY time they were speeding in their cars, the backlash would wipe the speed limit laws off the books. The copyright maximalists should be happy with what they have for laws now, because once everyone notices what they the maximalists want to take away from us, the politician's only hopes for survival then will be to roll back the laws substantially.

The appellate court also overturned the district court’s interpretation of the additional safe harbor language related to defendants (mis)use of the safe harbor when they derive financial benefit directly from infringing activity and can control the activity.

The lower court found that this "right and ability to control" language required specific knowledge, item by infringing item, in order to control the activity. The appellate court disagreed that item specific knowledge of infringing activity is required and remanded for further consideration of Youtube’s right and ability to control infringing content on its site.

That should provide a lot of heartburn for infringers. Amazing that you missed that while furiously spinning this decision into something it isn't.

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Actually, I didn't. I wrote about the ruling on the "right and ability to control." See the paragraph that starts "the third issue..."

You should try reading before lying. Otherwise, you just look pretty pitiful.

That should provide a lot of heartburn for infringers.

Um. No. The court set no standard and left it up to the lower court. So we'll see what the standard turns out to be.

Amazing that you missed that while furiously spinning this decision into something it isn't.

Except I didn't miss it. The only person who "missed" something in this thread is you. This is pretty funny. No wonder you never admit who pays you or who you are. Because then everyone would know what a total and complete tool you were. Hell, you can't even read the few paragraphs I wrote and you have to attack and get it 100% wrong? What a sad individual you must be in real life.

Re: Re:

Safe harbors

This is not a good thing. The DMCA "safe harbor" is a horrible law, because it only provides a legal protection that was already available anyway, but it shackles it to the morally abominable DMCA takedown process. It doesn't protect the rights of useful sites like YouTube; it weakens them. So we don't want the safe harbor provisions upheld or reaffirmed; we want the entire DMCA thrown out.

If you want to protect websites that deal with user content, just apply some common sense and get Congress to codify that they operate under the aegis of Common Carrier law, which protects them from liability, as the safe harbor provision does, but without the Due Process-destroying baggage.

Something Else

I don't think the phrase "the right and ability to control" can be interpreted apart from the preceding phrase that financial benefit be "directly attributable to the infringing activity". Specifically, as a condition for safe harbor protections the law states that the service provider must not "receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity".

Thus, even if the appeals court is right and the law does not require specific knowledge of infringement in cases involving financial benefit, it does appear to require that financial benefit intentionally be attached to the specific items being infringed. In this context, the loss of safe harbor protections only makes sense if the service provider plays an active role in selecting those items that result in financial benefit for the service provider, and which it knew or had reason to know were infringing.